Employee Received 1099 NEC for Commissions

[Padfoot55]

Daughter received a 1099 NEC from Employer for commissions.  She repairs jewelry for employer as a full time salaried employee but employer has also started paying commissions based on a percentage of the business. She is not a consultant or self employed. How should this be entered in turbotax.  Should I check the "My employer reported this extra money on a 1099 NEC but it should have been reported on a W-2." in the uncommon situations apply section? Should it be considered under self employed section? Or is it other income?

Thanks.  Paul

[Mike9241]

as an employee, the commissions should have gone on her w-2.  it's virtually impossible for someone to be both an employee and an independent contractor for the same employer at the same when performing the same services. the fact that she got the NEC almost certainly indicates it was not on her w-2

the problem your daughter faces is getting this corrected.  the employer may refuse or worse.

the IRS says you need to contact the employer first for a correction and only if they refuse file form 4852

with her return. not sure that all versions of the app handle this form.

https://www.irs.gov/pub/irs-pdf/f4852.pdf 

the IRS will likely contact the employer about your daughter's filing which can result in penalties and taxes being levied against the employer.

[Padfoot55]

Thank you for the response.  Can the employer do a 1099 misc for the commission income or does it need to a W-2.

[Padfoot55]

Can the employer submit a 1099 misc to the employee or does it need to be a W-2 for commissions to an employee.

[DaveF1006]

Your daughter will need to check with the employer to see if they paid the FICA taxes on the amount reported on the 1099-NEC. If the employer did not pay these payroll taxes, then she will need to report this as self-employment income in Turbo Tax to pay her Social Security and Medicare taxes (FICA taxes). if this is the case,  go to federal>wages and income>self employment>Self-employment income and expenses

I realize she isn't in a business but to report these taxes, she will need to report this like having a business. If the employer did pay the FICA Taxes, report this by doing the following.

1. federal>wages and income>other common income>1099-NEC
2. Answer the questions and when you get to the screen that mentions Does one of these uncommon situations apply? select XXX employer reported this extra money on a 1099-NEC but it should have been reported on a W-2.
3. Finish out the section

@Padfoot55

[AmeliesUncle]

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@DaveF1006 wrote:

Your daughter will need to check with the employer to see if they paid the FICA taxes on the amount reported on the 1099-NEC. If the employer did not pay these payroll taxes, then she will need to report this as self-employment income in Turbo Tax to pay her Social Security and Medicare taxes (FICA taxes). if this is the case,  go to federal>wages and income>self employment>Self-employment income and expenses

I realize she isn't in a business but to report these taxes, she will need to report this like having a business. If the employer did pay the FICA Taxes, report this by doing the following.

1. federal>wages and income>other common income>1099-NEC
2. Answer the questions and when you get to the screen that mentions Does one of these uncommon situations apply? select XXX employer reported this extra money on a 1099-NEC but it should have been reported on a W-2.
3. Finish out the section

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No, it is not reported as self employment income.

The bottom portion of your answer is correct, regardless if FICA was withheld or not.